Life insurance. It’s not just for spouses who work outside the home anymore. Just because your wife stays at home doesn’t mean she doesn’t need life insurance. If she’s taking care of the kids while you go to work, you might need a substantial amount of extra money if she were to die.

The Real Purpose of Life Insurance

While life insurance does provide money for those you leave behind, it’s real purpose is to transfer financial risk away from you and onto an insurance company. Seen in this light, it’s much easier to figure out whether your spouse needs life insurance or not.

Let’s assume your wife stays home and takes care of the children or even home schools them. What is the financial risk involved there if she dies? Well, you would have to find someone to take care of your children, and you would need to figure out where they would attend school. You might even need a babysitter for times when children aren’t in school. Can you afford those risks? If you’re like most people, you probably can’t.

Child Day Care

If you have small children, day care is a real cost you may have to incur – especially if you don’t have willing and able family or friends willing to take care of them. Day care can be expensive. In essence, part of the value your wife provides will be equal to the cost of at least partial day dare for your children while you’re at work. You will need to figure out how much such care costs in your area and add up those costs for every year day care is needed. Insurance coverage should provide an amount equal to the expected cost of care.

On average, expect to pay between $3,500 and just over $18,000 per year for day care, according to the National Association of Child Care Resource & Referral Agencies (NACCRRA).

Private Schooling

If your children are home schooled, you may wish to continue this level of education. If so, you’ll need to find out how much it costs for a private school. Insurance on your wife should be enough to cover these costs. Don’t forget to include things like lunch and supplies. Those costs can really add up.

According to the Council for American Private Education, the cost for private schooling can average from between $8,000 and $20,000. If you’re being conservative in your estimates, you may end up needing between $150,000 and $200,000 depending on where your children are right now in their education.

Babysitting

One of the biggest surprises you face is the cost of a babysitter. Think of all of the times when you or your spouse can leave the home and leave the children with whoever decides to stay behind. With your spouse gone, you have two choices: take the kids or hire a babysitter.

Good sitters often don’t come cheap. Unless you have willing and able family members (or friends), you may end up spending several hundred dollars a week just to have someone watch your children.

Is Insurance Worth It? 

In many cases, buying insurance on your wife makes a lot of sense since taking care of your children is a lot to ask of your friends and family day in and day out. Life insurance buys you the security you want for your children. They’re definitely worth the cost, and so is your wife.